“[There’s] an acceleration of countries trying to disassociate and decouple themselves from the US dollar.”– Damian White, Sr. Precious Metals Advisor
Ever since the gold standard was abandoned, the world economy has embarked on the largest monetary experiment ever conducted. For a long time, the US enjoyed a position of influence over that experiment with the dollar cemented as the world reserve currency. As that dominance weakens, there’s no telling where this takes us.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Precious Metals Advisor Joe Elkjer & Sr. Precious Metals Advisor Damian White explain the rapid onset of de-dollarization, its driving forces, and why smart investors are seeking out hard assets such as gold and silver coins, gold bullion bars and silver bars.
The Recent Past of Dollar Dominance
Since the mid-1940s, the US dollar has been the glue binding the entire global economy. Everything from local goods and international trade to major commodities such as oil and gas was traded in USD.
Foreign economies sought out the dollar for its stability, and the US enjoyed unparalleled influence on the world stage. Now, that decades-long dominance along with the security of the global economy is under attack as many countries decouple and disassociate from the dollar.
The Banking Crisis Spark
US adversaries have actively sought to dethrone the US dollar for years, but it took a domestic banking crisis to really set the de-dollarization trend in motion. Nearly every banking institution in the US has a frightening amount of unrealized losses on their balance sheets due to bond losses spurred by the Fed’s aggressive rate hikes.
The Petrodollar: A Retrospective
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As banks collapse across the US, it’s no wonder why countries are actively deleveraging their balance sheets from our treasuries and bonds. Foreign leaders now see the US dollar as a risk rather than an economic asset. Nobody suspected de-dollarization could happen so quickly, yet every day it seems like another country is diversifying from the dollar.
China Leads De-Dollarization Push
Wherever the US falls short on the international stage, China is eagerly filling in the void. On the back of the Biden administration’s virtual abandonment of a Middle East policy, Xi Ji Ping recently brokered a historic peace deal between Saudi Arabia and Iran. At the same time, China is deepening its ties with the Kremlin as Russia is pushed out of world affairs.
These diplomatic moves are being used as currency to further the CCP’s economic goals to the direct detriment of the US dollar. China’s burgeoning influence in the Middle East resulted in the country’s first purchase of liquid natural gas in their currency, threatening the dominance of the Petroyuan. On top of that, China and Brazil recently agreed to abandon the dollar for trade.
Precious Metals in a De-Dollarized Future
Before this fiat currency experiment, gold provided stability to the global economy. Now, things are coming full circle as smart investors actively transfer their paper investments to gold, silver and other hard assets. Once again, people are seeking protection from the inevitable downfalls of fiat-backed systems.
Central banks are leading that charge with 125 tons of gold purchases over the past year. The momentum is showing no signs of slowing down as governments notched their highest consumption of gold to kickstart the year in over a decade. Gold prices responded strongly to this move by bursting out of a 15-year holding pattern, signaling a big year for 2023.
Inform Yourself & Protect Your Wealth
The process of de-dollarization is picking up more steam with every passing day as countries are encouraged by our government’s failures to decouple from USD. This imminent threat to the US economy is driving a lot of investors to protect their wealth in physical gold, silver, and other hard assets. At this point, every investor should take account of this concerning situation and plan accordingly. It likely only gets worse from here.
If you’re interested in learning more about de-dollarization and how it impacts your investments, requesting a FREE COPY of our Petrodollar Report.